Question
An existing asset that cost $17,000 two years ago has a market value of $11,000 today, an expected salvage value of $2,300 at the end
An existing asset that cost $17,000 two years ago has a market value of $11,000 today, an expected salvage value of $2,300 at the end of its remaining useful life of six more years, and annual operating costs of $3,800. A new asset under consideration as a replacement has an initial cost of $19,300, an expected salvage value of $5,500 at the end of its economic life of three years, and annual operating costs of $1,700. It is assumed that this new asset could be replaced by another one identical in every respect after three years at the same initial cost of $19,300, if desired. Use a MARR of 18% to determine if the existing asset should be replaced immediately. Assume the project that uses the asset will last for 6 years from today. Enter the NET PRESENT COST of the preferred alternative.
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